Legal Maxim

The maxim “nemo dat quod non habet” literally means “they cannot give what they don’t have”, which implies that if a person buys or takes as a gift, some property from someone who does not have a right over the property will also have no rights over the newly acquired property. This is also known as the derivative principle and is connected to the principle of first in time is first in right. Section 27 of the Sale of Goods Act, 1930 says that if a person who is not authorised for exchange of goods does it no matter what then the person with whom the exchange has been made will have no rights over the exchanged goods. This section aims at protecting the interests of the real owner of any good. Apart from this, this maxim also finds its application in the Indian Contract Act. However, there are times when this maxim can be used in such a manner that the innocent buyer is put at loss. In such cases, it is acknowledged that an exception to this maxim has to be made in cases where the buyer has acquired the product through fair means in good faith without the knowledge that the seller is not the real owner of the product sold.

Greenwood v. Bennett

In this case, Bennett who was the owner of a jaguar car had given it up for repairing to a man named Searle. While the car was in repairing, Searle used it for his own purpose and met with an accident. After the accident, the car was in great damage and thus Searle sold that car to Harper for £75, who in turn repaired it for £226 and then sold it to a finance company. In this entire process, no one other than Searle knew that Bennett was the real owner of the car. The Court thus held that, Searle was not the real owner of the car and thus had no rights over the car. According to the maxim nemo dat quod non habet, a person who does not hold any rights over any property cannot give up that property to someone else and thus Bennett was entitled to recover the car.

Phillips v. Brooks

In this case, a person committed a fraud by buying a ring through the use of a worthless cheque. He then pledged the ring to someone else. When the matter was brought up, the Court held that the person who had been promised the ring is legally entitled to the product, since he had no knowledge as to the fraud made by the seller.